Alibaba’s move comes as the online grocery segment in the country has hotted up, with Amazon India seeing 150% growth in its grocery segment during 2016

Chinese e-commerce giant Alibaba could soon announce a $300-million deal for purchasing over one-third stake in online grocer BigBasket, after close to six months of negotiations.

Citing three unnamed sources with direct knowledge of the deal, the Economic Times reported on Thursday that Alibaba would soon add BigBasket stake purchase to its portfolio of strategic investments in India. “The deal is expected to be announced soon. The final contours of the secondary transaction are still being chalked out,” one of the aforementioned sources told the financial daily.

As reported earlier, Alibaba-backed online retailer Paytm Mall, too, is likely to invest in BigBasket as part of the deal. Its participation would, however, depend on the deal’s final structure. The Bengaluru-based online grocery platform, for its part, is expected to have a post-money valuation of about $850 million if the deal goes through.

If the deal is successfully closed, Alibaba and Paytm Mall, together, are likely to own between 35 per cent and 40 per cent stake in BigBasket, the report said. Further, according to the financial daily, the transaction would likely comprise a primary investment of close to $220 million and an amount of $80 million that would be used to buy the existing investors’ shares.

Entrepreneur K Ganesh and Meena Ganesh’s GrowthStory, along with investment firms Ascent Capital, Zodius Capital, and Helion Venture Partners, are expected to make a partial exist as part of the deal, the report said while citing sources. Further, BigBasket co-founders Hari Menon, Vipul Parekh, Abhinay Chaudhary, and VS Sudhakar are also expected to sell part of their shares in the company, the report added.

The notice, however, did not spell out the details of the proposed investment, including the quantum of stake and the financial value of the deal.

Earlier this year, there were reports citing sources that Alibaba, along with Paytm Mall, were in discussions with BigBasket to pick up a minority stake for about $200 million.

Investing in BigBasket would help Alibaba add more muscle to take on US-based rival Amazon, while for Paytm, the move would further strengthen its play in the Indian e-commerce space.

Alibaba’s move comes as the online grocery segment in the country has hotted up. As reported in May this year, online marketplace major Amazon India saw a 150per centgrowth during 2016 in its grocery segment, on the back of repeat customers and Prime membership. Groceries and entertainment are the two key segments for Amazon, which it believes are helping it to make e-commerce a habit among its customers in India and score over Flipkart.

Amazon has been working hard on making its FMCG and groceries category strong. “We have added 1.9 million products into the category and have the largest selection in India,” Saurabh Srivastava, director, category management, Amazon India had told Business Standard back then.

To bolster its grocery segment, the company has been selling it in four different formats: Amazon Pantry, which is their grocery vertical; Amazon Now, the company’s two-hour delivery service; Subscribe and Save, where customers can get items delivered periodically; and Super Value Day.

As of May this year, Flipkart, which earlier tried to sell groceries but failed to make much headway, is again refocusing on the segment after its last funding round. Sources said the renewed push is being made at the behest of investors who have seen Amazon make major headway in the category.

The Chinese interent giant is also focusing on the groceries segment in its own country. As reported in November this year, Alibaba Group Holding Ltd said it would invest HK$22.4 billion ($2.87 billion) for a major stake in China’s top hypermart operator, Sun Art Retail Group Ltd, as part of a wider push into offline retail.

As part of an alliance with Auchan Retail SA and Ruentex Group, Alibaba would buy the stake from Ruentex while Auchan Retail would boost its stake, the three companies said in a joint statement.